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Economic Relationships: Markets, Morals, Rights and Laws

16 Nov 2017

I listened to an LSE lecture recently. Unfortunately, I can’t remember the title, or the speaker. I seem to remember the topic involving a crisis for capitalism. But none of that is what stood out. What made me pay attention was an explanation of how we arrived at today’s model of free markets, and why we see markets as the ‘best’ or ‘most efficient’ version of human relationships. I’m paraphrasing heavily here, but here are the main points:

There are only four basic models of human relationships: markets, morals, rights and laws.

“Morals” refers to communities, where we all work together toward a certain goal. This is where you find altruism, and communal property, and the gift-giving connections between family members.

“Rights” refer to the ideals of equality, where we treat each other as equals in reference to some generally agreed principle.

“Laws” involves the question of justice and authoritarianism, where there is a hierarchy that demands respect and obedience.

“Markets” involves the idea of price, where people transact and the invisible hand manages to locate an equilibrium outcome.

But over the last few centuries, the market-model of human interaction has come to dominate the way that we think about human interaction. As markets became more efficient and public, due to industrialisation, globalisation and the internet, the other modes of human interaction have been relegated: morals have become minor concerns, laws have become maligned obstacles, and rights are only important insofar as they do not disrupt the overall efficiency of markets.

The strong implication, of course: that we’ve overstated the role of markets.

This way of thinking is known as “Relational Models Theory”, and it belongs to social anthropologist, Alan Fiske. Here is a more formal summary:

I’m also going to share a long quote from one of his papers:

“Basic Relationships” by Alan Fiske

The puppy barks. I wake up and crawl out of the bed I share with my wife and two small sons (and with the cat, when she chooses to sleep with us). I go take the puppy out. It’s not my job, in particular—it’s everybody’s job; whoever can get out of bed before the dog wakes everyone up is the one who takes the dog out. He’s a family dog.

I decide to make some coffee, so I open the refrigerator and choose French roast. The coffee, like all the food in the kitchen, belongs to all of us, of course. College roommates keep their food separate, but we’re a family. The kids get up and start running around getting shoes on and assembling backpacks for school. I call my five-year old, “Come on, Wyatt, let’s go feed Pogo!” Whoops! His name isn’t Wyatt, it’s Kai. Wyatt is the youngest. They have distinctly different personalities but I’m always mixing up their names. I even call the puppy Wyatt sometimes, I think because I feel a sort of paternal authority over all of them. The kids get us mixed up as well—sometimes they call me “Mom.”

Wyatt leans across the table, reaching over to take a raisin out of his sister Zoé’s cereal. As far as he’s concerned, cereal is communal property, even when it’s already in the bowl. But he accidentally spills Kai’s water, which pours into Kai’s lap. So Kai takes Wyatt’s cup and pours it into Wyatt’s lap. An eye for an eye, a cup for a cup. My wife dries them off and gets them back to their breakfasts.

She drives the older kids to their school and then goes down to the cooperative nursery school where it’s our family’s turn to help today. I get in the car and drive to work, having decided to stop at Starbucks rather than make another cup of coffee at home to take with me. It costs more at Starbucks, but their coffee is better than mine, enough to be worth the investment of an extra dollar or so. Besides, I’m in a hurry. Once I get into work mode I get to thinking about efficient use of my time.

At Starbucks I notice the madeleines and decide to bring one home to my daughter Zoé when I get back tonight. But if I bring her one, I have to bring exactly the same one for Kai and Wyatt, too. That’s a problem, because Wyatt prefers maple oat scones, but I know from experience that treats have to match exactly. Giving out different ones only leads to envy, and the envy outweighs the pleasure in the treat – even if all three of them get just what they secretly wanted. It’s the same thing when I pick them up to fly them over my head like airplanes. If I start doing it, I have to be willing to do it three times, once (or twice, or three times) for each. If I don’t, my wife will likely tell me to—reasonably enough. Like anybody in a functional family, I’m required to be a social calculating machine. Almost everything I do affects everybody else, and I need to make educated guesses about what the effects will be.

I reach the 405 freeway, where I find the traffic is bad. It aggravates me. I keep thinking about what it’s costing me in terms of work I could be doing; I can’t afford to waste this time sitting in a traffic jam and getting nothing accomplished. Sometimes I wish I had joined a car pool and could sit back and relax when it wasn’t my turn to drive. It would certainly be cheaper than driving alone.

I get to work and unlock my office. It’s pretty much like everyone else’s office in the department. The building used to be an undergraduate dorm, and students get jealous if their rooms are not about the same size. Come to think of it, Anthropology professors aren’t all that different. Of course, the Dean has a bigger office—but we let him get away with that.

I am planning a lecture so I go to the reading room to look up an article in one of the anthropology journals there. The reading room is a wonderful resource and a great faculty perk. All of us professors can use it, along with graduate students; we let undergraduates study there, too, when we’re not having a meeting. Everyone in the Department has free access to the books and journals there, but it’s not really open to the public. If people just walked in off the street, the books wouldn’t be there when we wanted them.

I find the article I’m looking for and take the journal to the photocopy room, where I enter my code and copy it to read and mark up. The copy I make gets charged against my allotment for the year. My colleagues and I all get exactly the same number of free whacks at the Start button on the department machine. If I use it too many times, I have to pay out of pocket for each copy. We’re all a little jealous of the Business School: over there, we’ve heard, photocopying is like water from the drinking fountain. Everybody just helps themselves to whatever they need.

Everyone in my Department is responsible for teaching five courses a year. Here, too, there’s a little interdepartmental envy. In Psychology, they only have to teach three courses. They’re treated alike, but they’re treated better than we are. Or at least it seems that way. However, I can’t complain: a federal research grant pays part of my salary, permitting me to “buy out” of some of my teaching load. I spend more time on research than I do on teaching, which the University administration likes because the more (and better) research we publish, the higher the ranking of the University. Not only that, but the federal government pays the overhead on my research, offsetting the costs of things like reading rooms and drinking fountains. Right now the overhead rate for UCLA is 53% of direct costs, and that’s an important chunk of the school’s budget.

I leave work early to go to my daughter’s soccer game. This is her first year and she’s still learning the basics. While I watch the game, I think about all the rules of equality she’s picking up for the first time on the soccer field. All the kids of both teams are the same age. Every team has the same number of players. The field is symmetrical. Each side defends a goal for one half, then switches to defend the other one. Living in our household for six years, Zoé has learned lots of things, but not these. Some of the rudiments of human relationship – quite a few, in fact – have to be acquired in a different setting. If we didn’t have soccer, we’d have some other way of doing it. We always have.

My wife is already at the soccer field with the boys, and after the game we all go over to have dinner with the family of one of Zoé’s team mates. As we sit around the table, I wisely repress the temptation to tell everyone what I am actually thinking about: I am thinking about the difference between this ritual and the family dinners I used to eat in the villages of West Africa, during the years I lived there. Here, we all eat off of separate plates, but the food belongs to everyone in equal measure. Over there, it’s the opposite. Everyone eats out of a common pot, but in a carefully defined hierarchy. The first morsel of food are tossed on the ground and the first few drops from the gourd of beer are poured out as a libation to ancestors who are buried in the earth. Then the senior man takes a turn, and on down the line, with the women going last. I ponder would it would be like to try this in the suburbs of Los Angeles. But I don’t say anything. I don’t want my family ostracized by the soccer league.

My friends in Burkina Faso don’t just get to eat before their wives do; they own their wives. They own their children. The chief owns everyone in the village. There are rules of equality, but they apply mainly among people the same age, or wives in plural marriage. An older man will often have at least two or three wives, and will have to treat them all the same. The wives will take turns cooking, and in many cases, sleeping with the husband.

Although the men in these village take pride in the wives they own, they would be insulted to hear anyone say that they had “bought” them. That would imply that marriage is nothing more than a market transaction. That isn’t the way they feel. A good West African marriage is based on bonds deeper than mere cost-benefit calculation. That’s one issue on which people in the villages of Burkina Faso and people in the suburbs of southern California are in agreement.. The real psychological divide is over the idea of marriage as a unity: here, we get married, we vow at least metaphorically to merge our identities and become one. In West Africa, that idea would be ridiculous. Getting married doesn’t make you and your spouse into partners or teammates; all the rules of village hierarchy that prevail outside marriage prevail within it. The husband is number one, and no one questions that.

My mind snaps back to reality just in time for the serving of dessert. The kids get served first. Grownups have to wait their turn.

All my life, ever since I realized that other people existed, I have been preoccupied with the riddle of human relationships. I thought about it on the playground, on the basketball court in high school, in the dining hall at Harvard, and in the villages of West Africa. I think about it at home in Rancho Palos Verdes, and in the Anthropology Department at UCLA. Thinking about relationships is my hobby, and it is also my profession.

The Four Elementary Forms of Social Relationships

And over the course of 50 years or so of speculation and 30 years of serious research, I have found out something extraordinary. There are four fundamental choices human beings have in dealing with each other. Not three, or five, or seventy. Four choices. We can share communally. We can rank on the basis of authority. We can attempt to match equally. Or we can use ratios (such as prices).

…

Think about having a cup of coffee. In my own house or at the home of my friends, I can just help myself, pouring myself as much coffee as I want, sharing with others in the framework of “what’s mine is yours.” Or my friend can get me a cup of coffee in return for the cup of coffee I got for him yesterday, so we take turns or match small favors for each other. At Starbucks, I buy my coffee, using price and value as the framework. To my children, however, none of these principles apply to drinking coffee. To them, coffee is something that only “big people” are allowed to drink: It is a privilege that goes with authority and social rank.

What is true of a humble cup of coffee is true of the moral dilemmas surrounding major policy questions such as human organ donation. Decisions have to be made, and there are four fundamental ways to make them. The question is which of the four to use. Should we hold a lottery, giving each person an equal chance? Should we somehow rank the social importance of potential recipients, giving priority to those of the highest standing? Should we sell organs to the highest bidder (and perhaps use the proceeds to pay for the distribution system)? Or should we there be no shortage of organs, if we expect everyone in a family (or a local community) to give freely, offering a kidney, say, to anyone in the group who needs one?

It’s just something that I think we should think about.

Because perhaps the way we think about the world needs a bit of a paradigm shift.

Comments

Interesting as we see more business presidents and leaders, Trump, Rhamaphosa, Mashabe, Dangote was asked in Nigeria.I would argue that the finance minister is the Countries and Cities are becoming seen as a business. The CoCT in particular looks at decisions on how they impact the bottom line.